Global stock markets sank Monday after Swiss authorities arranged the takeover of troubled Credit Suisse amid fears of a global banking crisis ahead of a U.S. Federal Reserve meeting to decide on more possible interest rate hikes.
Hong Kong's main index slid 2.7%. London, Frankfurt and Paris opened down more than 1%. Shanghai, Tokyo and Sydney also declined. Wall Street futures were off 1%. Oil prices plunged more than US$2 per barrel.
Investors worry banks are cracking under the strain of unexpectedly fast, large rate hikes over the past year to cool economic activity and inflation. Prices of bonds and other assets on their books fell, fueling unease about the industry's financial health. European banks' shares languished, with Deutsche Bank AG losing 3.7% and Banco Santander SA slipping 1%. Societe Generale lost 3.4% and Credit Agricole fell 1.1%.
In Hong Kong, HSBC Holdings plc dropped 6.23% while Standard Chartered fell 7.3% and Bank of East Asia gave up 4.5%. Japanese banks also were mostly lower, with Mizuho Financial Group shedding 2.3% and smaller bank Resona Holdings down 3.7%. In Australia, Macquarie Group sank 4.6%.The Shanghai Composite Index lost 0.5% to 3,234.91 after the Chinese central bank on Friday freed up more money for lending by reducing the amount of their deposits commercial lenders are required to hold in reserve.
Separately, New York Community Bank agreed to buy part of failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said Sunday. The FDIC said $60 billion in Signature Bank's loans will remain in receivership and are expected to be sold off in time.
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